Delhi High Court held In the case of Principal CIT vs. Atlanta Capital Pvt. Ltd. that the requirement of both the issuance and the service of such upon the Assessee for the purposes of Section 147 and 148 of the Act are mandatory ‘jurisdictional requirements’. The fact that the assessee was provided a copy of the notice during reassessment proceedings will not make any difference on account of mandatory requirement of issuance & service of notice u/s 148.

Facts of the Case

In this case notice u/s 148 dated 27th March 2008 was issued to the Assessee by the AO at the address at B-231, Okhla Industrial Area, Phase-I, New Delhi while the Assessee had shifted from that address with effect from 1st February 2005 to a new address at B-115, Sarvodaya Enclave, New Delhi. For AY 2005-06 and the subsequent AYs, the Assessee disclosed his address as B-115, Sarvodaya Enclave, New Delhi. Even the AO had sent letters to the Assessee at the changed address on 8th August 2007. The intimation under Section 143(1) dated 25th January 2008 for AY 2006-07 was also sent by the AO to the Assessee at the same changed address i.e. B-115, Sarvodaya Enclave, New Delhi.

Contention of the Revenue

The ld counsel of the revenue submitted that the notice satisfied the requirement as to limitation under Section 149 (b) of the Act. He further submitted that it was incumbent on the Assessee to have got his changed address entered in the PAN Data Base failing which the AO would only go by the address given in the record of the relevant AY which in the case is AY 2001-02. Also a photocopy of the notice was given to the Assessee during the re-assessment proceedings and that by itself should constitute sufficient service of notice on the Assessee.

Held by CIT (A)

CIT (A) held that photocopy of the notice was given to the Assessee during the re-assessment proceedings and that by itself should constitute sufficient service of notice on the Assessee.

Held by ITAT

The ITAT held that there is no proper service of notice on the assessee u/s 148. It was noticed that the notice itself was not issued to the correct address. The fact that the said notice, sent by speed post, was not returned unserved, would be to no avail since the address given in the notice was not the last known address of the Assessee.

Held by High Court

No provision in the Income Tax Act has been shown to the Court which obliges the Assessee to ensure that his changed address is entered in the PAN Data Base failing which he is precluded from insisting on the notice under Section 148 being issued to him at the known address and being served upon him. In the present case, on facts, it is not in dispute that the AO was aware of the change of address of the Assessee and yet the notice under Section 148 of the Act was issued at the older address.

In light of the law explained by the Supreme Court in R.K. Upadhyaya v. Shanbhai P. Patel (1987) 3 SCC 96 which has in turn been followed by this Court in Chetan Gupta dated 15th September 2015 in ITA No. 72 of 2014, in which it was held that under Section 148 of the Act, the issue of notice to the Assessee and service of such notice upon the Assessee are jurisdictional requirements that must be mandatorily complied with. They are not mere procedural requirements. The mere fact that an Assessee participated in the re-assessment proceedings despite not having been issued or served with the notice under Section 148 of the Act in accordance with law will not constitute a waiver of the said jurisdictional requirement.